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WOLF BLITZER, HOST: This is "Late Edition," the last word in Sunday talk. (BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There is a better way for the people in North Korea, and their leader can make better choices if he truly cares about their plight.

(END VIDEO CLIP)

BLITZER: Stopping a nuclear North Korea. In the wake of its failed missile test, what's the next move for the United States? We'll ask U.S. Undersecretary of State Nicholas Burns. Plus, two top U.S. senators, Republican Lindsey Graham and Democrat Barbara Boxer weigh in.

(BEGIN VIDEO CLIP)

SAMIR AL-SUMAIDAIE, IRAQI AMBASSADOR TO U.S.: What happens in Iraq will shape the future of the Middle East. And the future of the Middle East will shape the future of the world.

Tensions in Iran, Iraq and North Korea. What's the right strategy for success? We'll get perspective from two foreign policy experts, former National Security Adviser Zbigniew Brzezinski and former Secretary of State Alexander Haig.

(BEGIN VIDEO CLIP)

MICHAEL CHERTOFF, SECRETARY, U.S. DEPARTMENT OF HOMELAND SECURITY: Terrorists will attack anywhere. They'll use any method of transportation, and they continue to wage war against free people all over the world, including in the United States.

(END VIDEO CLIP)

BLITZER: Tackling terror around the world. How should countries prepare for new threats from Osama bin Laden, al Qaida and homegrown cells? We'll get insight from two terror analysts, Peter Bergen and Fouad Makhzoumi. "Late Edition's" lineup begins right now. It's 11 a.m. in Washington, 8 a.m. in Los Angeles, midnight in Pyongyang, 7 p.m. in Baghdad. Wherever you're watching from around the world, thanks for joining us for "Late Edition." We'll get to my interview with Undersecretary of State Nick Burns in just a few minutes. First, though, let's go to CNN's Fredricka Whitfield in the CNN Center for a quick check of what's in the news right now. Fred?

(NEWSBREAK)

BLITZER: Thanks very much, Fred. We're following those two developing stories out of Baghdad this morning. Let's start with the U.S. military announcing those charges in the slaying of an Iraqi family in Mahmoudiya. Let's bring in our senior international correspondent, Nic Robertson. He's now on the scene for us in Baghdad with the latest on that. Nic?

NIC ROBERTSON, CNN CORRESPONDENT: Well, Wolf, the five soldiers are still on their base here in Iraq, according to defense officials. They are being held on the base. Their weapons have been taken away from them. They're being escorted wherever they go on the base. The charges against four of them are that they were involved in the rape and murder of a young Iraqi woman and the murder of three of her family members.

They are charged with conspiring along with former Specialist Stephen Green, who has been charged with the planning to rape and the rape of and killing of a young Iraqi woman, who was living near a checkpoint. The charges go on to say that the house where the family were living that were killed was burnt down to hide the evidence. And an AK-47 used in their killing thrown in a nearby canal.

The fifth soldier in Iraq who has been charged in connection with this is being charged with dereliction of duty for failing to inform his officers about what he knew had transpired. Wolf?

BLITZER: Nic, on this other very troubling development today in Baghdad, apparently Shiite gunmen going door to door in a neighborhood in the Iraqi capital, singling out Iraqi Sunnis and simply slaughtering them. What's going on?

ROBERTSON: Well, one eyewitness told us he came out of his house in this neighborhood in the west of Baghdad, a predominantly Sunni neighborhood, and he said he saw a pile of four bodies in one place just outside his house, three bodies piled up at a bus stop nearby, another pile of five bodies. The Iraqi emergency police say more than 40 Sunnis have been killed. They say between four and six carloads of gunmen toured the area, stopped people, asked them for their identification papers, read their names, and when they saw their names could tell whether they were Sunni or Shia.

And they killed the Sunnis. This comes a day after an attack on a Shia mosque in the same area where 12 people were killed, 18 were wounded. the moderate Iraqi Islamic party, a Sunni party, says one of its politicians was killed in the area. They blame the Mehdi militia, a Shia militia, for carrying out these killings. They also claim that a family was shot in the house, a mother shot outside the house and the children chased by gunmen into the house and killed inside the house. Wolf?

BLITZER: What a horror. Thanks very much, Nic. Nic Robertson on the scene for us in Baghdad.

And with the latest violence in Baghdad this morning and the new charges being filed against these U.S. troops, Iraq, once again, very much in the headlines. Just as a short while ago, I spoke with the U.S. undersecretary of state, Nicholas Burns, about Iraq, North Korea and more.

(BEGIN VIDEOTAPE)

BLITZER: Mr. Secretary, thanks very much for joining us.

First to Iraq, where there are horrible reports coming out overnight that Shiite militia groups are simply going into Sunni neighborhoods, grabbing individuals. If they determine they are Sunnis, they are simply killing them point-blank. What's going on?

NICHOLAS BURNS, UNDERSECRETARY OF STATE: Wolf, we're very disturbed by the reports that we've seen as well, and we don't have a complete picture, because these events are unfolding as we speak. But certainly, you know, we have faith in the government of Prime Minister Maliki that his intention and his government's intention is to try to bring the different groups in Iraq together, the Sunni and the Shia and the Kurd. The government obviously has to take responsibility for law and order in the streets, and we hope very much that these horrible and violent actions will be put to a stop immediately.

BLITZER: Do you have confidence that the Prime Minister Nouri al-Maliki, himself a Shiite, is going after these Shiite militias which are apparently responsible for this latest surge in sectarian violence?

BURNS: Wolf, we have great confidence in Prime Minister Maliki. He's someone who has a very clear sense of what he wants to do. He's someone who's been saying the right things and doing the right things, frankly, to try to bring order back to the streets of Iraq.

Obviously, the government of Iraq has a right and a self-interest in going after terrorist groups, and those terrorists who would disturb the peace and who are responsible for the bombings in Baghdad. And so you have to understand that the government has that right, and I think we have to wait and see in the full light of day.

All the details of these reports are coming in, but we have great confidence in the government of Iraq, and we understand that law and order and maintaining order in the streets, and especially going after the terrorist groups is something that any government, including the Iraqi government, has a first-order priority to accomplish.

BLITZER: The Los Angeles Times has a major article today on what it calls widespread corruption within the Iraqi police force. Among other things, it writes this: "Brutality and corruption and rampant in Iraq's police force, with abuses including the rape of female prisoners, the release of terrorism suspects in exchange for bribes, assassinations of police officers and participation in insurgent bombings, according to confidential Iraqi government documents detailing more than 400 police corruption investigations."

Is this the same kind of information you're getting from the U.S. embassy in Baghdad?

BURNS: Well, Wolf, obviously the Iraqi government has a lot on its hands, and it's got a first priority of maintaining law and order in its streets. It also has to work to defend the borders of the country. There's a major insurgency that it has to confront. So, one can understand that that's where the priority focus of the Iraqi government is.

When there are reports of corruption, obviously we expect the government of Iraq to respond to them, to do the right thing and to crack down on those who are responsible for corrupt practices.

BLITZER: Before we move on to North Korea, final question on Iraq. The prime minister, Nouri al-Maliki, this week said this as far as immunity for U.S. military, U.S. and other coalition military forces in Iraq are concerned for alleged crimes. Listen to what Prime Minister Maliki said.

(BEGIN VIDEO CLIP)

NOURI AL-MALIKI, IRAQI PRIME MINISTER (through translator): We believe that the immunity given to international forces is what emboldens them to commit such crimes in cold blood. This requires that such immunity should be reconsidered. We affirm that we should participate in investigating crimes committed against the Iraqi people.

(END VIDEO CLIP)

BLITZER: Should U.S. military personnel in Iraq be subject to Iraqi justice?

BURNS: Well, there are agreements in place that are very specific and very detailed that protect American forces, military forces and personnel and diplomatic personnel, and we obviously want those agreements to be respected.

At the same time, of course, you've seen very open and candid statements by our government this week, responding to these reports of incidents and, some, of atrocities. And we're looking into those. And we're being very transparent publicly as we work through these issues.

So I think that we'll continue to go ahead and make sure that we're doing what we have to do to look into any allegations that are directed at our own government.

BLITZER: But you want to keep the status quo. You don't want to change it so that U.S. troops won't become subject to Iraqi jurisprudence?

BURNS: You know, there are agreements in place all over the world, Wolf, when we have military forces deployed, that provide elementary protection for those forces. And we do have an agreement in place and we hope and expect that agreement will be respected.

BLITZER: Let's talk about North Korea. You're trying to get the U.N. Security Council to impose sanctions against this already very isolated regime. What kind of sanctions, specifically?

What do you want to tighten up to put pressure on North Korea?

BURNS: Well, Wolf, the goal here is to get the North Koreans, to convince them, to pressure them, to come back to the six-party talks, and to implement the agreement of September 2005, which provides for the de-nuclearization of North Korea. It gives up its nuclear programs. It gives up its weapons of mass destruction.

To do that, we've got to operate on multiple diplomatic tracks. Our ambassador, Chris Hill, has been in Asia, in Beijing, in Seoul and Tokyo, over the last couple of days.

Both President Bush and Secretary Rice have been working the phones, talking to world leaders, particularly in Asia, particularly those countries that have influence in North Korea.

And obviously there's work underway at the United Nations, on a Chapter 7 Security Council resolution that would deny North Korea any trade and support in nuclear items from any member of the U.N. itself.

That is the right step for the United States. And we hope very much that the Chinese government, which has some influence in Pyongyang, will now use that influence and exert some pressure on the North Korean regime to get it to come back to the six-party talks and end these missile tests that have been so disruptive and, frankly, so irresponsible, over the past week.

BLITZER: China and Russia, both of whom have veto power at the U.N. Security Council, say, at least for now, they're not going to support any such United Nations Security Council resolution that would impose the kind of sanctions, the trade sanctions that you're calling for.

Do you have any reason to believe they're going to change their minds?

BURNS: Oh, I don't think we've heard -- we have the last word from either of those two governments. They're trying to work through this problem.

And they understand that as two members of the six-party framework, they have a responsibility to use their influence with North Korea and to convince the North Koreans to cease and desist from the missile tests and to come back to the negotiations that we all think are the right way to move. And so we're counting on Russia and China to use that influence. And I think you'll see over the course of the next couple of days, when we get the results of this Chinese delegation to Pyongyang, I think you will then see us move ahead in New York at the Security Council. We hope that China and Russia are going to support this resolution.

This resolution essentially backs up and substantiates everything that we, China, Russia, Japan, South Korea and the United States have been trying to do, to send a strong signal to the North Koreans that the time has come to return to the negotiating table.

BLITZER: Are there indications, right now, the North Koreans might try to launch another long-range intercontinental ballistic missile, the Taepodong-2, the one that failed less than a minute after take-off the other day?

BURNS: Wolf, I cannot speak to that, but I can say that obviously what they've tried to do back on July 4th was to intimidate their neighbors. They've violated their own missile moratorium from 2004 in doing so.

They certainly violated the spirit of the September 19th agreement. And you know, it wouldn't surprise -- nothing that the North Korean government does or says really surprises us. They're entirely unpredictable. But I think they have a reasonable sense of what the limits are here. The United States...

BLITZER: Are you absolutely, positively convinced, Mr. Secretary, that North Korea already has nuclear bombs?

BURNS: Well, North Korea says that it's nuclear-capable. And there is every indication to believe that it probably is. And that's why it's so important for us to convince the North Koreans, and frankly to use this combined international leverage, to move them in the direction of going back to implement the September agreement, because that provides essentially for the dismantling of the North Korean nuclear program.

Now, they signed up to that. Pyongyang agreed to that arrangement. And they've now, since September, failed to implement it. So it's very clear what the U.S. national interest is here. Our national interest is to pursue very aggressively and in a tough-minded way this track to get the North Koreans to live up those commitments.

BLITZER: One final question, because we're almost out of time, on Gaza right now. The standoff between the Israelis and the Palestinians. Some criticism coming in from the Middle East, that U.S. diplomacy between the Israelis and the Palestinians, which in recent years have been very robust, is now missing in action.

Is the Bush administration, is the State Department doing anything behind the scenes, and at what level, to try to stop the violence?

BURNS: We are active every day at the highest levels. Secretary Rice has been involved, every day of this crisis, to try to call on the Hamas authorities to release the Israeli soldier, to stop the Kassam missile attacks on the civilian population of Israel.

Let's remember who started this. It was the outrageous actions of Hamas, in violating Israel's sovereignty, in taking the soldier hostage, in killing the Israeli settler, that unleashed this.

I can tell you, there's lots of unhappiness in the Arab world, as well as in the wider world, about how Hamas has conducted this. And we have been very clearly involved on a detailed level, trying to help bring this crisis to an end.

BLITZER: Nicholas Burns is the undersecretary of state. Mr. Secretary, thanks for joining us on "Late Edition."

BURNS: Thanks, Wolf, pleasure.

BLITZER: And just ahead: should the United States negotiate a nuclear deal directly with North Korea? We'll get analysis from two top statesman, the former secretary of state, Alexander Haig and former national security adviser, Zbigniew Brzezinski.

Then, what do two key U.S. senators think should be done to handle the North Korean threat? We'll ask Lindsey Graham and Barbara Boxer.

And don't forget, for our north American viewers at 1:00 p.m. Eastern, John Roberts has a CNN "Special Report," "This Week at War." That airs right after "Late Edition." We'll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One of the lessons of September the 11th is that what takes place in other parts of the world can come home to hurt the American people.

(END VIDEO CLIP)

BLITZER: President Bush earlier this week, speaking out about the threats other nations potentially pose to the United States. Welcome back to "Late Edition." I'm Wolf Blitzer in Washington.

Joining us now to discuss all the hot-button issues currently on the world stage, two guests, former Secretary of State Alexander Haig. He's joining us from West Palm Beach in Florida. And here in Washington, the former national security adviser, Zbigniew Brzezinski. Gentlemen, welcome back to "Late Edition."

Let's start off, Secretary Haig, with North Korea. Do you support direct bilateral U.S. talks with North Korea right now to try to ease this crisis? ALEXANDER HAIG, FORMER SECRETARY OF STATE: No, I don't. I'm not against it, per se. But I think it's very clear that we need China. We need Russia. We certainly need Japan and the rest of the powers involved in the six to come together and develop a consensus for action.

If we do otherwise, all we're going to do be used and again demonstrate that all the North has to do is rattle our cage and we fall in line. We've done that for over 20 years, if you look back at the whole panorama of one thing after another that we've overlooked. One deal after another that we put together, and one deal after another in which we were double-crossed.

BLITZER: Dr. Brzezinski, you agree with that assessment?

ZBIGNIEW BRZEZINSKI, FORMER NATIONAL SECURITY ADVISER: Basically, I agree. I would not exclude entirely some informal bilateral dialogue on the sidelines of the multilateral effort. But the emphasis has to be on the multilateral effort.

BLITZER: What's the downside? What's the risk if the U.S. says to North Korea, OK, we'll sit down. We'll talk. We'll try to work this out in conjunction with other parties who have obviously a great interest in this as well. BRZEZINSKI: The reason the North Koreans want a bilateral dialogue with the United States is to make the United States the problem in this issue. And then the resolution of the problem then rests on our shoulders. By doing it multilaterally, we engage others who should have, indeed do have, an interest in that issue. I don't exclude some side talks, but not formal, bilateral talks.

BLITZER: Are you convinced, Secretary Haig, that North Korea does, in fact, have nuclear bombs as they insist they do?

HAIG: Well, I think we have to go under the assumption that they have maybe one or two. And they're going to be crude and perhaps even flawed. But that's not changing the issue here. The issue is whether or not we are going to be continuously blackmailed into supporting the very things that we're opposed to. And that's exactly what the issue has been.

You know, I've been involved in this issue for 50 years, having fought and landed at Inchon, and it hasn't changed over the whole span of that time. Both parties have been essentially naive throughout the span of that 50-year period. And somehow this problem has not gotten -- not gone away. It's just gotten worse.

BLITZER: Dr. Brzezinski, the former secretary of defense during the Clinton administration, William Perry, and his colleague, Ashton Carter, have come out once again in the new issue of Time magazine with a blunt statement saying if the North Koreans persist in developing and trying to launch these intercontinental ballistic missiles that potentially could hit the West Coast of the United States, the U.S. should launch a preemptive strike and knock out those missiles.

Listen to what Ashton Carter, a former assistant defense secretary, said earlier today on "Meet the Press."

(BEGIN VIDEO CLIP)

ASHTON CARTER, FORMER ASSISTANT SECRETARY OF DEFENSE: If the North Koreans go out to the launch pad and erect that missile and prepare to launch it, we can destroy that before they can do it. To do so would be a very limited military action, a single bomb, a single cruise missile. The North Koreans aren't going to start a war in response to that kind of action.

(END VIDEO CLIP)

BLITZER: What do you think, Dr. Brzezinski?

BRZEZINSKI: Well, all we have is Ashton Carter's assurance that the North Koreans won't react militarily. I think we have to...

BLITZER: You have William Perry's assurance, too.

BRZEZINSKI: Well, he hasn't been quite as outspoken on this issue, I noticed.

BLITZER: Well, in Time magazine, he's got a pretty detailed article.

BRZEZINSKI: Well, I think the point is, anyone who advocates this has to go through systematic analysis of what the North Koreans could do in return. They could, for example, attack American forces in Ponmunjom, just as a demonstration. Or they could open up an artillery attack on Seoul, including American assets in Seoul. Or they could do more.

These are the kind of things we have to evaluate. Secondly, we have to ask the South Koreans and the Japanese, who would be, perhaps, in jeopardy, how do they feel about any such action? So it's easy to advocate these sort of instant solutions, surgical, it seems, on the surface. But one really has to think it through a little more seriously.

BLITZER: What do you think, Secretary Haig? A preemptive strike against those missile targets? You're a military man, a retired general. I assume it would not be a very, very difficult military operation to simply launch those cruise missiles and take out those North Korean missile launchers.

HAIG: Well, I don't think that's a solution. I agree with what Mr. Brzezinski just said. And that's not a rare occasion. But I think it's also very important to remember that they're not crazy in Pyongyang. They know if they were to ever flirt with the use of a nuclear weapon, that they wouldn't be here tomorrow.

And when we talk about deterrence, don't say deterrence is dead. Deterrence is very much alive, especially in the dealings with these rogue states. And, therefore, we should keep it alive and keep the capability evident so that the other side knows, not by bombast and threat but by action, that we mean business, and they don't dare resort to nuclear weapons.

We heard earlier, Dr. Brzezinski the undersecretary of state, Nick Burns, say the U.S. is still trying to convince China and Russia to go along with the U.N. Security Council resolution that would impose new sanctions against North Korea. So far, China and Russia not willing to go along. What happens if they don't, if they decide that they're not going to support this initiative?

BRZEZINSKI: Then our position is obviously weakened. So, we have to keep persisting and pressing them. And we do have some leverage. For example, Russia wants to be in WTO.

BLITZER: The World Trade Organization?

BRZEZINSKI: The World Trade Organization. That's leverage. We have other forms of leverage on the Russians. The Chinese also have an interest in an expansion of their role in the world, including the international system. We have leverage. But we have to be persistent and stick to it. Because, frankly, the other choices are not very palatable at this stage.

BLITZER: General Haig, do you think Russia and China will cooperate with the U.S., Japan, South Korea? HAIG: Well, we have reports today that that old saw that came up a few months ago of using the Russians to provide enriched-grade nuclear fuel to Iran, for example, may be resumed and may be in the cards. I think it's very important to remember that Russia doesn't want to be isolated, especially as it goes into this meeting of the eight. And it's getting that way for a host of reasons, which are self-inflicted.

So they have a need. China, as well, has got to prove as a member of the Pacific family of nations that it is a positive force for peace, stability and rule of law, and not for terroristic actions of a rogue government in Pyongyang.

BLITZER: If Russia plays hardball -- and we're going to take a break after this question, Dr. Brzezinski -- and refuses to cooperate at the security council, should the U.S. and others take steps to remove Russia from the G-8 summit that's coming up?

BRZEZINSKI: No. The G-8 is now a fact. It's unfortunate that they were invited. It's unfortunate that they were labeled as a democracy. They shouldn't have been. But it's a fact. I don't think we can undo that.

However, I would favor also, in addition to the G-8, more private consultations among the G-7, which is a democratic group that shares common interests and common values. And that would be a strong signal to the Russians that they aren't really a bona fide member of the larger club.

BLITZER: We're going to take a break. Dr. Brzezinski, General Haig, stand by, please. Lots more to talk about, including the crisis in the Middle East, the recent standoff in Gaza and also what's going on with Iran. But up next, we'll have a quick check of what's in the news right now, including the latest on the shocking sectarian violence under way right now in Baghdad. Stay with us.

Dr. Brzezinski, if Iran takes a look at North Korea, the confidence it seems to have because it presumably has some nuclear bombs, as it looks in its own region, sees India, Pakistan, Israel, with nuclear weapons capabilities, what possible incentive would Iran, right now, have to give up its potential for a nuclear arsenal?

BRZEZINSKI: I have no doubt that there are lots of people in Iran, including, even, in the public, and particularly in the public, who want the bomb, no doubt about it.

But at the same time, Iran has to calculate that, if it goes out to get it and we impose sanctions, uranium development is going to be absolutely halted. The country is going to plunge into increasing disarray and tensions and so forth.

So, I can see some segments of the political elite calculating that perhaps it's better to accommodate, to respond favorably to the bargain but to bargain in a fashion that preserves for them the right to pursue the nuclear program.

And perhaps, at some future point, they may calculate they could return to the pursuit more actively, for nuclear weapons.

BLITZER: Secretary Haig, is that realistic to assume that Iran might negotiate to end its nuclear weapons potential?

HAIG: Well, I think it's going to be very difficult, unless it's something that's done with the strong urging of both China and, above all, the Soviet Union, or former Soviet Union.

And this is where the key may lie. And I think that's why the United States has spoken favorably to the compromise I mentioned earlier. And that is to have Russia develop their gradations of nuclear fuel and to do it outside the country.

I would still be skeptical, because I think they want the power above all. But this depends on whether they succeed as a regime. They're in trouble now. And they're failing.

Is there any hope, from your perspective, that things can turn out positively, at least in the short term in Iraq? BRZEZINSKI: Not if the occupation keeps going on. Let me just read you a couple of passages from what the Iraqi national security adviser said.

He said, "Iraqis see foreign troops as occupiers rather than liberators. It is their presence that's forcing Iraqis to join the resistance. The removal of foreign troops will legitimate Iraq's government."

Removal of foreign troops will legitimate the government. The point is, this civil war is not going to stop as long as the occupation persists.

BLITZER: So you want the U.S. and the other forces to withdraw?

BRZEZINSKI: Yes, because...

BLITZER: Over how long a period of time?

BRZEZINSKI: Well, that is what I have emphasized repeatedly. It's something to be negotiated between us and the Iraqis, seriously negotiated and then jointly announced.

But only then will a legitimate, real Iraqi government emerge. The people we now have as the Iraqi government spend most of their time in the so-called green zone, which is an American fortress. And they're viewed, essentially, as American puppets.

The reason the Kurds have control over the north is that they are an authentic set of leaders. We don't have authentic Iraqi leaders in Baghdad.

HAIG: Well, obviously, I'm skeptical about some of that analysis. What are we doing today -- we are trying to turn it over to the Iraqis. The U.S. general said this week that 50 percent of Iraq will be under the control of Iraqi government-controlled forces by the next year.

So this is progress that's being made. Of course, it's not easy. Of course, it's uncertain. There were a number of mistakes made in the early hours of this conflict. And I'd be the first to lead the charge. And I did, internally.

But be that as it may, I think we now have no alternative, unless we want to turn this into a global conflict with a radicalized Islam. Today, we're talking 20 to 30 percent, perhaps, infected. We could be talking, tomorrow, 50 or 100 percent. And then we would have a global conflict of a magnitude that would terrify us all.

BLITZER: Dr. Brzezinski, you helped the former president, Jimmy Carter, at Camp David, back in 1978, negotiate that first Israeli- Egyptian peace treaty, the Camp David accords. If you were still advising a current president, this president, to deal with the stalemate, the violence between the Israelis and Palestinians over Gaza right now, what would you recommend the U.S. do immediately to try to ease this crisis?

BRZEZINSKI: Well, first of all, I wouldn't be saying what the undersecretary of state said on your program just a few minutes ago, which was just a blanket endorsement for the Israeli policy of essential repressing the Gazans.

What I would be doing is I would be trying to build up Abbas. Abbas wanted to have...

BLITZER: The Palestinian Authority President Mahmoud Abbas?

BRZEZINSKI: Yes. He wanted to have the plebiscite and peace with Israel. And when he proposed that, there were indications that a large majority of all Palestinians wanted to endorse that proposal.

And I would encourage the Israelis to work with him and to help him, to build him up, to release prisoners, but to release them to him, not to Hamas, in order to build up a legitimate peace-oriented Palestinian option.

A policy of simple repression, of killing more Palestinians, in return for Palestinian outrages against Israelis, is not going to pacify the region. It's radicalizing it.

And I think we have to be more active and more determined to create some sort of a political balance between the two sides which is going to lead to a compromise.

BLITZER: We're almost out of time, but I'll let Secretary Haig button it up. Go ahead, Secretary.

HAIG: Well, we can't just turn our back on history. We helped create the state of Israel. We have obligations. The undersecretary was correct when he said it was Hamas that started this brouhaha.

BLITZER: Secretary Haig, Dr. Brzezinski, always good to have both of you on the program. Thanks very much for coming in.

And coming up next, are Iraqi troops ready to stand up and take control of their own country?

Then, as Iraqis take charge, will U.S. troops be able to stand down? Senators Lindsey Graham and Barbara Boxer weigh in. Don't go away. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." I'm Wolf Blitzer in Washington. The violent insurgency in Iraq and alleged U.S. troop atrocities have been in the headlines in recent weeks.

Here now to help us better understand what's going on is the Iraqi ambassador to the United States, Samir Sumaidaie.

Mr. Ambassador, welcome back to "Late Edition."

SUMAIDAIE: Thank you.

BLITZER: As we speak right now, these horrendous reports of Shiite gunmen going door to door in a neighborhood in Baghdad, looking at people's identification cards, and if they suspect they're Shiites, they kill them.

What's this all about?

SUMAIDAIE: Well, this is a continuation of the sectarian violence which we have had, which escalated after the attack on the Samarra shrine.

BLITZER: Let me just be precise. What I meant to say was these Shiite gunmen are going after Sunnis.

SUMAIDAIE: Yes, correct.

BLITZER: If they have a Sunni name, they simply kill them.

SUMAIDAIE: Correct. And there were atrocities committed in the other direction only in the last few days. We had bombs set off in al-Sadr city, which killed dozens and dozens of people. And that was targeted against Shiites.

So, we will have this sectarian violence, no doubt, continue for a while. The important thing is, really, to enable the government to control the situation.

And the government, now, is a national unity government. It has the right policies. It has declared that it must disband militias. And the atrocities of today were obviously perpetrated by a militia.

I think the Americans, the international community and, of course, all responsible Iraqis must help this government, must enable this government to execute its policy of disbanding militias.

BLITZER: You heard Dr. Brzezinski suggest, just a few moments ago, that the most important thing that could be done to lift up the Iraqi government is to see the foreign military, the U.S. and coalition forces, the so-called occupation, withdraw, to give new credibility to the Iraqi government.

Is he right?

SUMAIDAIE: With all due respect to dr. Brzezinski, he is absolutely wrong, because, if we go that way, it will be total victory for the terrorists. It will not enable the Iraqi government.

The Iraqi government does not need to be legitimized. This is an elected Iraqi government. Remember, 70 percent of the Iraqi electorate went out and voted for it. So it requires no legitimacy from anybody else.

BLITZER: Here are some statistics that came out. Civilians deaths in Iraq, in June of this year, 1,595; in June of last year, 879; in May of this year, 1,375; in May of last year, 850.

It looks like it's getting worse from year to year.

SUMAIDAIE: Well, it might. We still might not hit the top of the curve. There is no doubt about it, the situation is bad. The country is bleeding.

But this government must continue to build up its institutions, including the security forces. After the removal of Saddam, the state was destroyed. There were no institutions.

For the first time, now we have an opportunity. We have an elected government. But the institutions are still weak. They are not able to stand on their feet.

What we've got to do is to complete building the institutions so they can start taking control. That's taking place in some areas in Iraq. We have to extend that, not give up.

BLITZER: Your American counterpart in Baghdad, the U.S. ambassador, Zalmay Khalilzad, said this the other day.

He said, "In terms of the level of advice, it has not had any impact at this point. As you know, the level of violence is still quite high."

He was talking about what has happened since the U.S. killed Abu Musab al-Zarqawi, the terrorist number one in Iraq.

Do you agree with his assessment? SUMAIDAIE: I agree. And nobody expected that the killing of Zarqawi would automatically stop the violence. But it is a step in the right direction. And it is part of the process.

We have to continue to fight terrorists, but at the same time, continue to strengthen and enable our security forces and reform them so that they are free of militias, they are free of bad people and infiltrators.

And then they can enjoy the trust of the people. And they can become a dependable tool of the state. We have not reached that, but it is a process that is ongoing, and the prime minister has declared a clear policy in that direction.

BLITZER: Here's what Osama bin Laden said on this recent audiotape that came out the other day. Listen to this.

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (THROUGH TRANSLATOR): Our brothers, the mujahadeen and al Qaida organization have chosen the dear brother Abu Hamsa al Muhajir as their leader to succeed Abu Musab al Zarqawi. I advise him to focus his fighting on the Americans and everyone who supports them and allies himself with them in their war on the people of Islam and Iraq.

(END VIDEO CLIP)

BLITZER: That's a direct threat to people like you, who support the U.S. in Iraq. How worried should you and your colleagues be, and the government, who want to work with the United States in Iraq, given this bold threat from Osama bin Laden?

SUMAIDAIE: According to this threat, just about two-thirds of the Iraqi people are targets because the government is the largest employer in Iraq. It has millions of people working with it in the security forces or the ministries. And Zarqawi and al Qaida have defined anybody working for the government to be a target. So, he has targeted the entire Iraqi people. So either he wins or we win.

BLITZER: The Iraqi government also released a list of the 41 most Iraqi alleged criminals right now. They released a statement the other day, including Saddam Hussein's wife and daughters, some of whom live in Jordan right now, and Mowaffak al Rubaie, the national security adviser, said that there are countries, neighbors of Jordan -- neighbors of Iraq that are cooperating with this insurgency with these actions against the Iraqi government. Do you want to spell out who is responsible for that?

SUMAIDAIE: Well, what we've got to do is to use all legitimate means to stop the threats against Iraqi civilians and Iraqi people, whether from inside Iraq or from outside. And we know that this insurgency is being fed and financed from outside Iraq. And if the Iraqi government has evidence, which I believe it has against certain individuals for supporting and financing this insurgency, we'll have to go after them in the international arena, and we must insist on bringing them to justice.

BLITZER: Are you referring to Syria, or Jordan, or Saudi Arabia?

SUMAIDAIE: I'm referring to any country which harbors an Iraqi or any national who supports the insurgency in Iraq.

BLITZER: But you don't want to name names?

SUMAIDAIE: I don't want to name names now.

BLITZER: We'll leave it there for now, Mr. Ambassador. Thanks for coming in.

SUMAIDAIE: Thank you.

BLITZER: And good luck to you, and good luck to all the Iraqi people.

SUMAIDAIE: Thank you very much, Wolf. BLITZER: And don't forget our web question of the week: What's the best way to handle North Korea's nuclear program? Diplomacy, sanctions or military action? Cast your vote. Go to cnn.com/lateedition.

(BEGIN VIDEOTAPE)

BLITZER: Bill Gates, what's his story? The world's richest man announced that over the next two years, he'll give up his day-to-day role as chairman of the Microsoft cooperation. Gates says he's making the move to devote more time to the Bill and Melinda Gates Foundation, which focuses on global health and education issues. Gates, whom Forbes magazine lists is worth an estimated $51 billion, began programming computers at the age of 13. In 1975, he co-founded Microsoft along with his childhood friend, Paul Allen, revolutionizing the computer industry by designing software for personal computers.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: And there's much more ahead on "Late Edition." As violence rages in Iraq, is there a timetable in sight for U.S. troop withdrawal? Senators Lindsey Graham and Barbara Boxer standing by to weigh in.

Then, who is pulling the strings of al Qaida 2.0? Is Osama bin Laden still in full control? We'll get insight from our expert terror panel. "Late Edition" continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back. We'll get to my interview with Senators Lindsey Graham and Barbara Boxer in just a few minutes. First, though, let's get a quick check of what's in the news right with Fredricka Whitfield, standing by at the CNN Center.

(NEWSBREAK)

BLITZER: Thanks very much, Fred.

And we're continuing to follow those developing stories out of Iraq. Let's get straight to our senior international correspondent, Nic Robertson. He's joining us live from Baghdad.

Nic, first of all, the latest violence today in Baghdad: the reports you've been sharing with our viewers -- those reports are simply horrendous.

ROBERTSON: Wolf, there are new details, a new attack this evening. It appears to be another sectarian attack.

On the first analysis, it would appear to be a tit for tat for what we were describing this morning. Let me begin, just, with what's happened this evening: 7:00 p.m. this evening, just within the last hour, two bombs in a Shia market have killed 10 people, wounded 25 others.

That was in a tiny Shia enclave in a Sunni stronghold in the Northeast of Baghdad. This morning, Sunnis being killed, more than 40, sectarian death squads roaming and four to six cars, according to the Iraqi emergency police here in Baghdad ,who they say, they were stopping people on the streets, checking identity papers, when the militia gunmen, which is how they're being described by one political party here, when these militia gunmen asked people for their papers, read their papers, looked at their names. If they had a Sunni name, then they were killed.

One eyewitness reporter seeing piles of bodies around his particular neighborhood. The Sunni Iraqi Islamic party here, a moderate party, said one of its politicians killed and a family killed in their house as well, Wolf.

BLITZER: And Nic, what's the latest on these four more U.S. troops that have been charged in connection with the rape and murder of that young girl in Mahmoudiya?

ROBERTSON: Wolf, we know that they're being kept on their base. We know they've had their weapons taken away from them. We know that, whenever they move around on their base, they have to go with military escort, as well as those four other soldiers who have now been charged with the rape and murder of a young Iraqi woman, the murder of three other of her family members.

Also, a fifth soldier is being charged with dereliction of duty for failing to inform officers about these events. They are being charged in connection with the charges against former Private First Class Steven Green.

That is, planning to rape a young Iraqi woman who was in a house near a checkpoint, raping her, killing her, killing the family, attempting to destroy the evidence by burning the building down and throwing the AK-47 used in the killings, throwing it into a nearby canal. Wolf?

Nic Robertson in Baghdad. Nic, be careful over there. Thanks very much.

Let's get some more now. Here to discuss the situation in Iraq as well as the threat from North Korea, the overall war on terror and more, are two key U.S. senators.

Joining us from Greenville, South Carolina, Republican Lindsey Graham. He's a member of the Senate Armed Services Committee. And joining us here in Washington is Democrat Barbara Boxer. She's a member of the Foreign Relations Committee.

Senators, thanks so much for joining us.

Senator Boxer, I'll start with you. This latest sectarian strife in Iraq right now -- you've been among those calling for a timeline, a timetable for a complete U.S. pullout from Iraq. Have you had any second thoughts about that, given what the Iraqi ambassador to the United States just said that any such timeline would simply reinforce this sectarian strife, that they need these U.S. and other foreign troops there to help them stabilize their country?

SEN. BARBARA BOXER (D), CALIFORNIA: Well, I could just tell you this, Wolf. When I went to Iraq about a year ago and spoke to General Casey, he was very clear on the point that our long-term presence is counterproductive, that it is fueling the insurgency; it is making matters worse.

Eighty-seven percent of the Iraqi people want to see a timeline. Now, if we are here to help them and they are speaking with, literally, one voice, I think that is the right course.

And I feel stronger than ever every time I hear what's going on there. It's a nightmare that gets worse and worse. Our troops are in the middle of a civil war there.

It's a difficult assignment. It's one that I don't even think has a clear mission anymore. Our troops have done everything we've asked them, from the day they got there. And, you know what, we won the war. This is an occupation. And it isn't working.

BLITZER: Well, we hear the reports, Senator Graham, about these Sunni militia men, today, going after Sunnis (sic) in these residential neighborhoods, going house to house, looking at I.D. papers and simply killing anyone that seems to have a Shiite name.

And we hear of similar atrocities by the Sunni insurgents against Shiites. It looks like the sectarian violence is getting really, really intense. And there are fears, once again, of a civil war.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Well, if I had one thing that I could wish for the Iraqi people, it would be to disarm the militias. It's going to be very difficult to form a new government, a functioning government, where you have armed camps roaming around in the country.

But I would say this. We have had three elections in Iraq. Every time we've given them a goal, they have met the goal. We have a constitution written. We have a unity government being formed. And you've got militia people creating sectarian violence to disrupt a democratic Iraq.

And at the same time, at the same moment, you've got Shias, Sunnis and Kurds coming up with a political solution for a Democratic Iraq. So who is going to win?

I believe the political leadership of Iraq, if supported by the United States and the world at large, will overcome the militia threat, as they have overcome other threats.

But we have got to be patient. There will be a timeline for us to withdraw. But it needs to come from the elected leadership of the Iraqi people. That would empower them, diminish the terrorists. If it comes from us, it's going to send the wrong signal. It would diminish the elected leadership of Iraq. It would empower the terrorists. So I do believe there will be a timetable set, but it needs to be set by the Iraqi people through their elected representatives.

BLITZER: Also today, Senator Boxer, we've seen more arrests of U.S. soldiers in Iraq, accused of this horrendous crime, raping this young girl, killing other members of the family.

The prime minister of Iraq, Nouri al-Maliki, this week, said it's time for the Iraqi government to have authority, some control over alleged atrocities committed by U.S. and foreign forces. Listen to what he said.

(BEGIN VIDEO CLIP)

NOURI AL-MALIKI, IRAQI PRIME MINISTER (THROUGH TRANSLATOR): I believe that the immunity given to international forces is what emboldened them to commit such crimes in cold blood.

This requires that such immunity should be reconsidered. We affirm that we should participate in investigating crimes committed against the Iraqi people.

(END VIDEO CLIP)

BLITZER: Do you agree with him?

BOXER: Listen, I would not trust the Iraqi government to try any American citizen. They can't even control their own country. We have tried to help them do it. They can't even stop the violence, one Iraqi sect against another.

And now we're going to hand over our military?

I have full confidence that our military will punish those responsible. But I also want to go a step further, Wolf. We are putting our military into an absolute nightmare.

Everyone says war is hell. We know that. We all use that word. This particular situation, they don't know who the enemy is, they're having a lot of problems.

One in three has post-traumatic stress. They are in deep trouble over there, our troops are. And many of them are being sent onto the battlefield with anti-depressants.

I really feel that the whole issue here is getting out of there. And yes, you're going to have troops act in a way that is just unthinkable, because of the stress they're under and because of this mission which is very unclear to me.

And no, I would not turn them over to the Iraqi government, no way. BLITZER: Senator Graham, what about you? What if the prime minister of Iraq, close ally of this U.S. Bush administration, this U.S. government, persists in demanding that the Iraqis get authority over alleged atrocities committed by U.S. troops? What would you say to him? What would you do?

GRAHAM: I would respectfully decline to do that. I agree with Barbara in this sense. We have a status of forces agreement with the Iraqi government. We have status of forces agreement all over the world with host countries where our people will be tried by us if they commit crimes. We have it in Germany, we have it in Japan, we have it all over the world. So it is nothing new. It is nothing unusual for Iraq.

I can assure the Iraqi people, I've been a military lawyer for over 20 years, I'm a reservist, judge advocate. What will happen with these young men, that they will be given a fair trial in our military legal system, and if they're found guilty, they'll be severely punished.

I can assure the Iraqi people that we in the United States take misconduct by troops very seriously, and that we're going to put on display a legal system that I am quite proud of and been part of for the last 20 years.

In terms of what we should do in Iraq, our troops, I've been there four times, feel very close to this mission. They believe they're making the world safer by fighting the terrorists there and not here. Enlistments are up. We're not going to judge everybody by four or five people.

Morale is good in Iraq. People have a sense of purpose. They're re-enlisting there in greater numbers than anywhere else in the world. So I want to get this right. So do the troops. And we've got to be patient, because this is a determined enemy. We've got to be just as determined as they are.

BLITZER: We're going to move on to North Korea, but a quick domestic political question, Senator Boxer, related to Iraq. Senator Joe Lieberman, he strongly supports the Bush administration's stance on Iraq. You strongly oppose that stance. Do you support his reelection?

BOXER: I do.

And I wanted to say to Lindsey that he's mixing up the war on terror and the war on Iraq. There wasn't one terror cell in Iraq when 9/11 occurred. We have many more in this country.

I do support Joe. He's asked me to go to his state, tell his people the work I've done with him on the environment, protecting our kids from being sprayed with pesticides, to test pesticides on kids, global warming, keeping the air clean. He's a strong supporter of women's right to choose.

BLITZER: So you'll go and campaign for him? BOXER: I am going to spend a couple of hours there in Connecticut, just telling the people what I know about Joe.

He and I disagree completely on the war on Iraq. I disagree with a lot of people on the war in Iraq. It is up to the people in Connecticut. And they're going to make a decision, and let's see what it is.

BLITZER: And what happens if he loses the primary and he runs as an independent? Will you support him then?

BOXER: I think we'll all have something to say at that time. But the people of Connecticut will make their choice.

BLITZER: Do you support Senator Lieberman, Senator Graham, even though you're a Republican?

GRAHAM: I admire Barbara Boxer for supporting Joe Lieberman. I have the utmost admiration for him. He's a man of his conviction. And I think he believes that Iraq is part of the war on terror. Certainly the terrorists do. They're there in large numbers, trying to destabilize this democracy. The biggest nightmare for a terrorist is a functioning democracy in the Mideast, where a woman can have her say about her children, people of different ethnic backgrounds and religious backgrounds can work together and live together in peace. That's why the terrorists are there trying to disrupt this. I think Joe sees Iraq as very much a central battlefront in the war on terror.

I'll leave it up to the Democratic primary voter in Connecticut, but I'm a big fan of Joe Lieberman as a person. I admire him tremendously.

BLITZER: Sounds like a pretty good endorsement from Senator Graham, but he's not getting involved in Connecticut politics.

Senator Graham, stand by. Senator Boxer, also, please stand by. We have a lot more to talk about, including the latest situation at Guantanamo Bay. Should that prison be shut down?

Also, it is called al Qaida 2.0. How powerful does the terrorist organization remain, and how is it evolving? We'll get insight from our expert terror panel.

And later, the U.S. Supreme Court hands down an important ruling regarding the rights of Guantanamo Bay detainees. What does it mean for Osama bin Laden's bodyguard and driver, Salim Hamdan? We'll ask his lawyers.

Don't forget, for our North American viewers, at 1:00 p.m. Eastern, right at the top of the hour, John Roberts has a CNN special report, "This Week at War." That airs right after "Late Edition."

Senator Graham, what is wrong with the U.S. having a direct bilateral dialogue with North Korea if that will ease this nuclear stalemate?

GRAHAM: I agree with President Bush; it needs to be a multi- party situation. In September of last year, Wolf, six-party talks yielded an agreement where North Korea would dismantle their nuclear weapons program in return for economic aid and other benefits. They reneged on that agreement.

I think it would be a huge mistake for us to sit down by ourselves. What they need to see, the North Koreans need to see a table full of people throughout the world -- the Japanese, the South Koreans, the Chinese, the Russians -- telling them the same thing, that if you keep going down the road of enhancing your nuclear program, if you treat -- if you keep testing missiles and keep making nuclear weapons, you're going to be an isolated nation forever. They need to hear it from the world, not just us. This is a world problem, not just a United States problem.

I don't want to do empower this regime. I want the world to condemn them. And the Chinese are the key to this. The Chinese are hanging by a thread politically with the Congress now over trade policy. If they don't really come to the table harder with North Korea, they're going to be hanging by a thread in terms of international diplomatic policy.

BLITZER: Sounds like a real threat to China coming from Senator Graham.

What about you, Senator Boxer? What do you think?

BOXER: Here's what I think. First of all, I think the six-party talks are central. I've always believed in them. But I don't think there's any conflict with having some back channel, one-on-one conversations with the North Koreans.

I think we've learned under the Bill Clinton administration that they can, in fact, get to trust someone. Bill Richardson was a special envoy there. And he got to know them a little bit. They're so isolated.

So to me, I think arguing about the shape of the table isn't what we should be doing. I think the most important thing here is making sure that we use every avenue open to us. It's not a sign of weakness to tell people what you think, to look in their eye and tell them what you think.

It's not a one-on-one with President Bush, for goodness sakes. I think it could be a special envoy. It could be Chris Hill. It could be someone else. You do it as part of the six-party talks. So I don't think there should be an argument about this. We seem to argue about everything.

And by the way, Senator Lugar, a Republican who is my chairman of the foreign relations committee, has called for one-on-one talks, as has Lisa Murkowski of Alaska, Republican. I support what they're saying. I think they're right.

BLITZER: Senator Graham, here is what Bill Richardson, the governor of New Mexico, himself a former U.N. ambassador during the Clinton administration, went on some trips to North Korea over the years, as you well know. Listen to the way he phrased it. Listen to this.

(BEGIN VIDEO CLIP)

BILL RICHARDSON, GOVERNOR OF NEW MEXICO: This is not a military crisis. This is a diplomatic crisis. The best way to resolve it is, in my judgment, face-to-face, direct talks, which the administration so far has not wanted to pursue.

(END VIDEO CLIP)

BLITZER: All right, Senator Graham, you want to respond to that?

GRAHAM: Yeah. During the Clinton years, we tried to negotiate with the North Koreans directly. Madeleine Albright went over. We cut a deal with them where we would help them economically, provide aid for food, and they would dismantle their nuclear weapons program. They backed out. In September, the six-party talks yielded an agreement where they would dismantle their nuclear weapons program, September of '05. They backed out. How many times do you have to go down this road? If the world doesn't get tough together against North Korea, we're going to allow this regime to get stronger militarily. This is about military negotiations. We're using diplomacy for what reason? To control a nuclear North Korea, trying to develop a nuclear missile to deliver a nuclear weapon.

So it very much is about military activity. And I do agree with President Bush. The world through the United Nations Security Council needs to condemn this rogue regime through economic sanctions. If we can't come together as a world and say that North Korea is a threat with nuclear weapons and a missile to deliver that nuclear weapon, then we're just blind as a world to what threats are in 2006.

BLITZER: Senator Graham makes a serious point, Senator Boxer, that all those agreements that the North Koreans worked out with the Clinton administration, including with Madeleine Albright, the secretary of state, they went ahead and violated those agreements, ripped them up and ignored them.

BOXER: Well, let's take another look. First of all, I'm from California. I think this is a very serious threat. And I have said in debate with Republican friends, don't take any option off the table, including military. So as far as being tough, I'm as tough as they come on North Korea. I have to be.

Number two, let's look back at what happened. They were in conversation with Korea, they did have -- with North Korea, they did have an agreement. And they were able to keep an eye on their nuclear development. It is true that they broke their agreement.

But the fact of the matter, since George Bush called them part of the axis of evil, way back in '02, they have now quadrupled their fissile material. Why? They isolated them even more, this administration, by not even talking with them at all. I think if you look at the Clinton administration's approach and the Bush administration's approach, I think when Clinton was president they were far less isolated and far less dangerous.

BLITZER: We have to unfortunately leave it there. Senator Boxer, thanks very much for coming in. Senator Graham, we'll continue this conversation down the road. A good discussion.

Coming up next, terror in the United States. A plot attack -- a plot to attack New York City apparently has been foiled. But do homegrown terrorists have something else in store? We're going to ask two terrorism analysts, Peter Bergen, Fouad Makhzoumi. They're standing by.

First, though, we'll get a quick check of what's in the news now, including the latest on that deadly plane crash in Russia. Stay with "Late Edition."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: These enemies are hidden, diffuse, secretive in their movements and asymmetrical in their tactics.

(END VIDEO CLIP)

BLITZER: Vice President Dick Cheney commenting on the new face of terror. Welcome back to "Late Edition." I'm Wolf Blitzer in Washington. Authorities this week announced they've foiled a plot to attack transit tunnels in New York City. Officials say they stopped the plot using intelligence and a lot of help from around the world.

Joining us now here in Washington to discuss this foiled plan and a lot more on terror, CNN terrorism analyst Peter Bergen, and Fouad Makhzoumi. He's the chairman of Lebanon's National Dialogue Party and a board member of the Council on Foreign Relations. Gentlemen, welcome back to "Late Edition."

And Peter, let me ask you. This alleged plot in New York, was it a big deal or a little deal?

PETER BERGEN, TERRORISM ANALYST: If you look at the Miami case, where they're basically terrorist wanna-bes, I think this was more than the Miami case. These guys were planning to go to Pakistan for training. They were discussing this plan. Was it a really big deal? You know, I don't think so. But was it worth stopping it? Of course. BLITZER: Fouad, there is suggestion that the Lebanese intelligence services played a significant role in helping the U.S. deal with this alleged plot in New York. How good is this cooperation between the Lebanese security services and the U.S. government?

FOUAD MAKHZOUMI, COUNCIL ON FOREIGN RELATIONS: Definitely, it's improving. But, you know, this is one more proof that not be able to achieve sustainable democracy in the Middle East and specifically Lebanon, we're see more of this. I mean, there is a lot of talk that there are a lot of cells that are hiding within the camps in Lebanon, and I think this is what we need to work harder to make sure that we stop it from happening.

BLITZER: Here's what the attorney general, Peter, Alberto Gonzales, said recently as far as this new face, potentially, of al Qaida. Listen to this. (BEGIN VIDEO CLIP)

ALBERTO GONZALES, U.S ATTORNEY GENERAL: Today, terrorist threats may come from smaller, more loosely-defined cells who are not affiliated with al Qaida, but who are inspired by a violent jihadist message. And left unchecked, these homegrown terrorists may prove to be as dangerous as groups like al Qaida.

(END VIDEO CLIP)

BLITZER: Some would suggest these home-grown groups could be a lot more dangerous than al Qaida.

BERGEN: I'm skeptical of that view because you can be -- you know, you can learn stuff on Internet but to go to a training camp in, you know, run by al Qaida, that's a whole different kind of experience. And I think that we're overdoing this whole idea of there being this new homegrown stuff, to the detriment of the idea that al Qaida, the organization actually remains a significant threat.

If you look at the London attack that happened a year ago, that looks like a classic al Qaida plot the more we know about it. If you look at the way that al Qaida in Iraq has now sworn allegiance again to Osama bin Laden, the guy who runs al Qaida in Iraq is someone who has known the number two in al Qaeda, Ayman al Zawahiri, since 1982.

It seems to me that al Qaida, the classic organization, has to some extent reconstituted itself on the Afghan-Pakistan border. We're seeing a lot of tapes from these guys, a blizzard of tapes in recent weeks, and to me that indicates that the organization remains a threat. And we -- yes, there are these self-starting cells, but let's not forget the organization that did 9/11. Its leaders were still, you know, at liberty, producing a lot of these tapes.

BLITZER: You want to weigh in, Fouad? You live in the Middle East, so you deal with these problems on a daily basis. Which is the bigger threat, the remnants of Osama bin Laden, Ayman al Zawahiri, the al Qaida network, or these sympathizers who are -- or developing, springing up presumably in a lot of other places?

MAKHZOUMI: I think we have to take them both seriously. Because remember, these things started long time ago. At '79 was the start with the Iranian revolution. And then these were so many cells that were created in the region. In order -- previously, it was perceived that is a local, regional issues.

And with the outreach after 9/11, definitely it has taken it into a different context. And we have to look at it more seriously because there is a lot of money that has been invested since '79 into these cells. And it is not going to be that easy to deal with it.

BLITZER: Well, where is this money coming from?

MAKHZOUMI: Well, remember, in '79 there was this big fight between the spreading of the Shiites and the spreading of the Sunnis. And there was a lot of money that came from the Gulf countries at that time that was spent in most of the Levant area. And Lebanon has one of the countries that has been making benefit out of that. Unfortunately, you know, in the past, it was perceived this is only to counteract the Shiite expansion. Nowadays, it's becoming a threat for all of us.

BLITZER: Here's what the New York City police commissioner said this week in the aftermath of the arrests and this suspected plot against the transit alliance in New York. Listen to Ray Kelly.

(BEGIN VIDEO CLIP)

RAY KELLY, NEW YORK CITY POLICE COMMISSIONER: As far as this particular plot is concerned, I think it tells us two things. First, that we're able to disrupt plots such as this as a result of good intelligence and very close coordination with law enforcement throughout the world. And secondly, that New York still remains in the crosshairs of the terrorists.

(END VIDEO CLIP)

BLITZER: Does New York, from your assessment, Peter, remain the central target, if you will, of these terrorists?

BERGEN: Of course. They hit New York in '93 with the first Trade Center attack, again on 9/11. We have seen other plots averted in New York. It is very surprising to me that the Department of Homeland Security would decide that this was an appropriate moment to cut New York City funding by 40 percent. That seems an extraordinary decision.

BLITZER: Fouad, I want you to listen to this excerpt from this latest audiotape that Osama bin Laden released. Listen to this.

(BEGIN VIDEO CLIP)

OSAMA BIN LADEN (THROUGH TRANSLATOR): Our Muslim people in Iraq need to learn that no truce should be accepted with the crusaders and the other states. There shouldn't be any half solutions, and there is no way out for them except by fighting and holding on to their struggle.

(END VIDEO CLIP)

BLITZER: How seriously does -- should the world take this threat from Osama bin Laden?

MAKHZOUMI: I think the terrorism are capitalizing on the mistrust that exists among the Jews, Muslims and Christians. And there is that main thought that everybody is trying to capitalize on it. And the key problem in the Middle East is the Arab-Israeli conflict and the occupation of Iraq. And I think these two need to be addressed by the American foreign policy, and soon.

And one of the things we have to look at, I mean, the previous President Bush and President Clinton had been very -- had a lot of respect in the region. So I was wondering why the current President Bush would not nominate these two exactly as he had done it for the tsunami, to try to reactivate the peace process in the Middle East and see if we can really achieve some kind of resolution at this time.

BLITZER: You mean former President Bush and former President Clinton to go and deal with the Israeli-Palestinian crisis that's unfolding right now?

MAKHZOUMI: Absolutely. Because this is important. These two have a lot of credibility in the Middle East. They have a lot of trust by the Arab leaders, and I think we can trust them to activate this process again.

BLITZER: Because a lot of experts say that this whole issue of the Israeli-Palestinian crisis, that the terrorists, they pay lip service to it but don't necessarily are all that engrossed. I want you to listen to what was said last week here on "Late Edition" by two -- by an Israeli and a Palestinian, two leaders who know a lot about this current crisis right now, Peter.

(BEGIN VIDEO CLIP)

SHIMON PERES, VICE PREMIER OF ISRAEL: They were elected properly but they behave like a terroristic organization. So, the fact that they were once elected doesn't give them a license to shoot, to kill, to endanger, to kidnap Israeli people.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SAEB ERAKAT, CHIEF PALESTINIAN NEGOTIATOR: I'm really afraid that every hour that passes in this line of thinking, this line of action, I'm afraid that we are going to lose the ability to solve the crisis diplomatically and politically.

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BLITZER: How much of the terror threat out there is a result of the grievances from the Israeli-Palestinian conflict as opposed to other issues that al Qaida and other terrorists have put forward? BERGEN: You know, if you ask Osama bin Laden in '97, as we did on CNN, what were his grievances, they were principally the U.S. military presence in Saudi Arabia, the sanctions against Iraq. He did mention the Israeli-Palestinian problem as well. I don't think the notion that bin Laden and al Qaida are late to the Palestinian problem I think has been overblown.

For them, of course, you know, the three holiest places in Islam are Mecca, Medina and of course the Dome of the Rock in Jerusalem. I think this is a motivating factor. There are others. Of course, the situation in Kashmir, what is going on in Iraq. I think Iraq, by the way, has -- if you look at the jihadi Web sites, Iraq is what they're going on about now, not so much the Israeli-Palestinian problem.

BLITZER: You mentioned the U.S. military presence in Iraq as the grievance. Is that more significant than the Israeli-Palestinian problem?

MAKHZOUMI: The core problem in the Middle East is the Arab- Israeli conflict. And I believe that the United States now since they've taken the decision to go into direct negotiations, through a multilateral composition, with Iran, I think they should do the same with Syria. They should do the same thing with all the Arab countries. Because at the end of the day, the United States is the strongest superpower in the world.

So why are they worried about it? I mean, dialogue, at any time, will minimize death.

BLITZER: Fouad Makhzoumi, Peter Bergen, thanks to both of you for coming in.

And coming up next, the Gitmo debate. Should the controversial prison at Guantanamo Bay in Cuba be closed?

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BLITZER: Welcome back to "Late Edition." The United States Supreme Court invalidated President Bush's plan to use military tribunals for trying detainees at Guantanamo Bay in Cuba, saying the plan violated two legal codes, American domestic law and the Geneva conventions.

But does this mean that the prison should be closed?

Joining us now here in Washington to explain the ruling, its effects, are the lawyers for Guantanamo Bay detainee Salim Ahmed Hamdan, Lieutenant Commander Charles Swift -- he's with the Office of the Chief Defense Counsel for the Department of Defense; he's one of the attorneys representing Hamdan -- and Neal Katyal; he's a professor at Georgetown University Law Center here in Washington, another attorney representing Hamdan.

Gentlemen, thanks very much for joining us. Neal, I'll start with you. You just came from Guantanamo Bay. You had a chance to speak with your client. What was his reaction to what has happened?

NEAL KATYAL, HAMDAN'S ATTORNEY: Well, I think he was overwhelmingly enthusiastic about the prospect of getting a fair trial for the first time in several years.

The Supreme Court invalidated this fake court system that President Bush set up. And now he's looking forward to having a fair and regular trial, which is what's guaranteed to him under the law.

BLITZER: You also had a chance, Commander, to meet with your client. And a lot of viewers will see a United States Navy officer. You're representing, you're defending an alleged Al Qaida operative right now, the driver, the bodyguard for Osama bin Laden.

Explain to our viewers who may not be familiar with this U.S. military justice system why you have been brought into this case.

CMMDR CHRLES SWIFT, HAMDAN'S ATTORNEY: Well, the administration decided to use a military trial. And in this case they initially wanted to use a military commission. And historically, military officers have represented the accused at that.

The really different part about this kind of a trial was that it didn't look like anything that I had ever worked in before.

And so not only did I have to earn Mr. Hamdan's trust, I also had to work in a system that was completely unfamiliar to me because the thing that it had most in common with anything in military justice was the name only.

BLITZER: So if he sees you -- Hamdan, this alleged Al Qaida operative, a detainee at Guantanamo Bay, when you see him, you wear that uniform, I assume.

SWIFT: Yes, I have.

BLITZER: And he trusts you and he talks to you?

SWIFT: It's a matter of earning that trust. And one of the most important things in earning his trust was going to federal court for him and fighting for a fair trial.

Actions speak louder than words in all cases when you're a defense attorney. And that I had been able to fight for him, along with Professor Katyal, to get that fair trial was key in earning that trust.

BLITZER: So what happens next, Neal?

As far as you're concerned, what's the next step in this legal process?

KATYAL: Well, the Supreme Court has pointed the way toward a fair and regular trial, either in a court-martial, which is the existing military system of justice, or in a civilian trial.

And we look forward and we're ready to have that trial at an appropriate time.

BLITZER: In the meantime, your client, Hamdan, and other detainees, they remain at Guantanamo Bay.

The president of the United States -- let me play this clip for you. He put it this way, in trying to explain what the Supreme Court ruled. This is how he phrased it.

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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: They were silent on whether or not Guantanamo -- whether or not we should have used Guantanamo. In other words, they accepted the use of Guantanamo, the decision I made.

(END VIDEO CLIP)

BLITZER: All right. Do you agree with the president's interpretation of what the Supreme Court decided?

KATYAL: I think that's, almost, a hilarious interpretation because not at issue in any way, shape or form was the detention of individuals at Guantanamo, as both his lawyer and myself agreed before the Supreme Court.

It's, kind of, like saying the Supreme Court agreed to $4 a gallon gasoline prices and upheld them, too. It was just simply not an issue in the case whether or not you could detain people at Guantanamo Bay. The only issue was a fair trial.

BLITZER: So what happens next from the military legal perspective. We heard what the civilian attorney representing Hamdan says. But what about the military attorney representing Hamdan?

SWIFT: Well, before -- the president, before the Supreme Court's ruling had said that he was committed to having fair trials for Guantanamo Bay and he was looking to the Supreme Court to point the way to do that.

They did that. They pointed to two systems of justice that the president could use, the existing uniform code of military justice or the civilian trial.

And we're ready to go forward there. I think it's very important to note that, you know, commissions have been tried here for almost three years. They've been an utter failure. We have been yet to have a single trial completed. In the same period of time, they've conducted almost 600, or more than 600, court-martials on the battlefields of Iraq and Afghanistan. The UCMJ and the court-martial system is ready now. Any attempt to go back in time to try and use these commissions is a huge mistake.

BLITZER: There have been some suicides among detainees at Guantanamo Bay recently. I assume you discussed that when you were there, just this weekend.

The Washington Post reported this on Saturday: "Detainees could apparently hide documents in their cells -- including instructions on how to tie knots and a classified U.S. military memo regarding cell locations of detainees and camp operation matters at Guantanamo -- by keeping the materials in envelopes labeled as lawyer-client communications."

What is this -- I assume that they've taken away those documents now, as a result of this. But what is the practical import of this?

KATYAL: I can't comment on that. I know that's from a filing by the United States government. But we don't have any knowledge of it. I mean, I would say, it's interesting that's the reaction of the government to the Hamdan ruling is to talk about attorney-client materials and seizing them.

I would have thought that, after this ruling, President Bush and the administration would have said, you know, I took an oath to uphold the Constitution and laws of the United States, and boy, the Supreme Court told me I didn't do that; I didn't comply with that.

I would have thought that would have been the reaction, instead of filings that accused the detainees of this, that or the other. It may be that that's true. We'll have that battled out in the courts over the next few months.

BLITZER: Did Hamdan suggest to you he was thinking of committing suicide?

KATYAL: I can't comment on anything about that. It's outside of my purview.

BLITZER: Because of what, attorney...

KATYAL: Attorney-client privilege.

BLITZER: ... attorney-client privilege. I assume that goes for you as well?

SWIFT: Yes, one of the things I take absolutely as the most important thing in representing a defendant is attorney-client privilege. And that's how I've earned his trust. So there will be a time to talk about the seizures, but today isn't that time.

BLITZER: We're going to have to leave it right there. Commander Swift, thanks very much for coming in. Neal Katyal, thanks to you as well. I know you didn't get much sleep last night, got in from Guantanamo Bay here in Washington quite late.

Up next, in case you missed it, "Late Edition" Sunday morning talk show roundup. And don't forget, coming up, for our North American viewers, in a few moments, right at the top of the hour, CNN special report, "This Week at War," hosted by John Roberts. Stay with us.

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BLITZER: And now in case you missed it, let's check some of the highlights from the Sunday morning talk shows.

Three of the shows focused in on the United States' response to North Korea firing test missiles from Pyongyang earlier this week.

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SEN. RICHARD LUGAR (R-IN): The Chinese now have got to get serious with North Korea. That is, they have the pressure, they're providing the food, the energy. They do so because they want to keep North Koreans inside North Korea, deeply fear the spread of North Koreans and chaos.

ASHTON B. CARTER, FORMER ASSISTANT SECRETARY OF DEFENSE: In dealing with North Korea, diplomacy has to have a coercive dimension. And we don't trade with North Korea, we don't recognize North Korea diplomatically. There is almost nothing we can do short of military action to apply pressure to North Korea.

We're capable of military action and it is important that that be an ingredient of coercive diplomacy, but the real levers on Kim Jong- Il are the Chinese and the South Koreans.

SEN. JOHN MCCAIN (R), ARIZONA: If we make it clear to China that we understand they're emerging on the world stage as a superpower, they should behave like one. And this will be a defining issue in our relations with China. And if they continue to vacillate as they have all last week in the United Nations, then there are consequences in our relationship.

We're not asking China to be charitable here. It is not in China's interest to see Asia destabilized, to see Japan become a nuclear power, to see this threat to stability in the region.

(END VIDEO CLIP)

BLITZER: And on "FOX News Sunday," Congressman Peter Hoekstra explains why he wrote a letter to the president last May saying the administration may have violated the law by not briefing Congress on various intelligence programs.

(BEGIN VIDEO CLIP)

REP. PETER HOEKSTRA (R-MI), CHAIRMAN, INTELLIGENCE CMTE: I want to set the standard there that it is not optional for this president or any president or people in the executive community not to keep the intelligence committees fully informed of what they are doing.

(END VIDEO CLIP)

BLITZER: Highlights from the other Sunday morning talk shows here on "Late Edition," the last word in Sunday talk.

Up next, the results of our Web question poll of the week. What is the best way to handle North Korea's nuclear program? Diplomacy, sanctions or military action? That's coming up. We'll be right back.

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BLITZER: Our "Late Edition" Web question asked -- what's the best way to handle North Korea's nuclear program? Here is how you voted. Check it out: 58 percent said diplomacy, 15 percent said sanctions, 27 percent said military action. Remember, though, this is not a scientific poll.

Let's take a quick look at what's on the cover of this week's major news magazines in the United States. Time magazine focuses in on what it calls the end of cowboy diplomacy. Newsweek features the new greening of America. And U.S. News and World Report gives us its exclusive rankings on America's best hospitals.

And that's your "Late Edition" for this Sunday, July 9th. Please be sure to join us next Sunday, and every Sunday, at 11:00 a.m. Eastern, for the last word in Sunday talk. I'm also in "THE SITUATION ROOM" Monday through Friday 4:00 to 6:00 p.m. Eastern, back for another hour at 7:00 p.m. Eastern.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington. For our North American viewers, "This Week at War" comes up next right after a quick check of the news.

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